The last time I was in Chennai was 2 years ago, and things seemed to have changed quite a bit since. During this trip I have been using Uber since the day I landed, and had quite a few interesting conversations with the people driving for Uber.
Uber is a service which the rest of the world is more familiar with, but they weren’t the first to enter the market here. NTL Taxi and Ola Cabs which work in pretty much the same way were the first to enter the app based taxi booking industry here. In the last few months however Uber has started penetrating the market. During a half hour ride I chatted with Anand who drives for Uber who let me in on a bunch of facts I found pretty interesting.
Penetrating the market
Anand first drove for NTL, and then jumped to Ola and now drives for Uber. He says the jumps were not all because he got more money, but more out of necessity. The one thing you have to keep in mind about the Indian market is that brand loyalty is not very easy to achieve here.
“NTL was working great for me, but I didn't get enough rides when Ola came around.” Initially Ola offered a higher pay with a guaranteed amount whether or not you got rides and a lot of the drivers switched over. This meant you got fewer cabs on NTL and Ola was the way to go. A similar thing is happening now with Uber entering the market
Uber currently offers a driver an “incentive” of Rs.7500 for 14 rides a day. Of course after Uber’s cut, sales tax etc one gets Rs.5000 odd. Anand an Uber driver said that since he didn't get enough rides on Ola he moved over to Uber. Ola required you to work a certain number of hours, but Uber needs you to do 14 rides(9 during peak hours, and 5 at other times) a day to achieve the 7K incentive they offer.
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Anand says he’d get about Rs.3500 if Uber didn't pay the incentive and he got only what the rides came out to be. So yeah the minute he is done 14 rides, he turns the app off and heads out for the day. It seems like Uber is eating the rest of the cost at the moment. Would he continue working for Uber if they stopped offering the incentive, just like Ola did? “yeah, I get rides for now and anything more than Rs.2500 a day should work out”
However he says Reliance is set to launch their service in the city and he believes their pay will be better. He says he expects a whole bunch of drivers to shift to that unless Uber decides to keep up with them. But right now Uber seems to rule the market here for now.
Problems of being an International Company
Anand is graduate and he is able to understand the way the Uber app works. This is not the case with the other drivers I’ve seen. The first one didn’t know he could press navigate to actually find the route to where we were going. I showed this to him and he is beyond speechless.
“ They have all the roads, Sir? Thank you for showing me this. I usually look at the dot on the map and roughly try to go there myself. The one-ways and not knowing some areas makes it hard. These Uber people are smart and their app is nice but they didn’t show us anything. I’m not educated and it takes someone to show me something before I understand it”
— rough translation from Tamil
Anand says the representatives in the local Uber office are barely out of high school, and all they know is the pay rates and collecting documents. They aren’t interested in getting the drivers to use the app properly.
Uber is building a solid app but they need to take a better effort to understand the market. Most drivers are not educated. They learn to use a smartphone by someone teaching them. Part of on-boarding a driver ought to include education about the app.
Peculiarities in the Indian Market
India is a developing country and has a huge market with 1.4 Billion people which everyone wants to cash in on. Anand the Uber driver I met, was just the driver. He didn’t own the car he drove. His employer, owned 10–15 cars, and employed one driver per car to drive for NTL/Ola/Uber. Apparently there are many such people, who do this. You make enough money from running an Uber at the moment to pay the driver his monthly salary, pay the monthly payment on the loan for the car and then make a profit.
Why do drivers not just buy their own cars? They can’t afford the down payment on one yet. They are saving up to be able to afford a loan and then get a car to drive for one of these companies.
This causes a bunch of problems. The service tax rate in India is 14.5%. Uber charges this amount to the customer who books the cab, however Anand says the drivers see a bill where tax rate says 5.8% on their end. I was not able to comprehend exactly what he said, but it boiled down to the fact that if you owned multiple cars and wanted to start a company which simply drove cars for Uber, your billing would be very wrong.
“They are a big foreign company sir. I am sure they would have their finances correct. But I am trying to start a company to run Uber cabs and I don’t know who to talk to. The people in the Uber office don’t want to help me. They only care about those people who add one more car on the road. Its all good sir, I’ll take my time and figure things out, I am sure these companies are here to stay, NTL or Ola or Uber or whatever the next thing is. I just need to plan my business model around this”
— Translated from Tamil
What next?
I’m pretty sure a company like Uber knows much more about the market than I have gathered in the last few days. However they still haven’t solved all the issues out there.
Driver education and working with the tiny “cab companies” built around Uber, are some things I’d like to see them get right. I’m very curious to see how they keep their drivers and make profits with all these other companies trying to make the most of the same market. Pricing it low to attract customers and yet high enough to attract drivers without having to shell out a fee to keep the drivers around is a pretty interesting problem.
With technology just starting to penetrate the Indian market, and companies striving to make services cheaper and more accessible to everyone, there is going to be a lot of competition and innovation which I’d love to keep an eye out for.